. . .there are some 2.5 million servers running Linux and . . . SCO has "identified by name those companies running many of them."

"We are in the process of contacting them about coming into compliance and taking a UnixWare license from us. If they refuse to do so, we will sue them directly and see them in court," he said.

When asked by eWEEK if SCO intended to first sue a large Linux user like a Wall Street financial firm or an enterprise-level Linux customer, McBride said that would probably be the case as smaller companies tend to settle when faced with litigation. . . .

"In a nutshell, this litigation is essentially about the GNU General Public License and all it stands for. That license has not yet been challenged or tested in court, but it is now going to be. We are also firmly and aggressively challenging the notion that Linux is a free operating system," McBride said.

Think a judge will like those words at trial? Heh heh.

Bench submitted a sale plan in January, months before any legal action against IBM was contemplated, McBride said. His agreement called for the sales to begin on March 8. He planned to sell 5,000 shares a month for the next 12 months, according to the plan.

"It appears that Hewlett-Packard Co. also got cold feet. As late as last week, SCO was telling attendees that HP would be giving a partner keynote at the forum on Tuesday morning. But on Sunday the schedule of events given to attendees when they registered makes no mention of an HP keynote.

"The keynote that was to be given by an HP executive is now scheduled to be made by Maggie Alexander, a vice president at SCO partner Progress Software.

"However, whatever the reason for the withdrawal of its keynote speaker, HP still sponsored the Sunday night welcome reception at the MGM Grand for Forum 2003 attendees, which was well attended and included food and drinks."

Well attended by whom? Passersby? Or people in the industry outside of SCO and Canopy group? If anyone attended, Groklaw would love a first-hand report. Relying on the mainstream press, well... you know.

"For the first time in the history of the industry, we have a major operating system platform that's being pushed on end users and at the same time the users take it, they're being told "Buyer beware -- you own all the inherent intellectual property risks with this product," said Darl McBride, SCO's chief executive.

Bloomberg News has an article, appearing in The Salt Lake Tribune, reporting that Darl McBride says that SCO's CFO submitted a sales plan in January "months before legal action was contemplated", presumably as proof that there is no connection between the stock sales and the lawsuit:

"Chief Financial Officer Robert Bench began the selling by SCO insiders, four days after SCO filed the suit against IBM. Bench is selling to help pay a $150,000 tax bill, McBride said. Under the Sarbanes-Oxley law, companies are no longer able to loan executives money to pay taxes or other expenses.

"Bench submitted a sale plan in January, months before any legal action against IBM was contemplated, McBride said. His agreement called for the sales to begin on March 8. He planned to sell 5,000 shares a month for the next 12 months, according to the plan."

Now, I'm no stock expert, but as for SCO not "contemplating" any legal action in January, here are some news stories from January of 2003 that I believe indicate that they were contemplating legal action in that month. All emphasis added by me.

It was on January 10 that the story first broke, in an article entitled, "SCO Threatens to Press IP Claims on Linux", by Maureen O'Gara:

"Informed sources, who would only talk on the guarantee of anonymity, say SCO has been proposing to charge users $96 per CPU for a so-called one-time System 5 for Linux software license to protect their systems from SCO-enforced patent issues if they ante up as soon as demand is made. . . .

"Sources say the scheme, which pretty much sounds like a protection racket - we won't sue if you pay -- isn't engraved in stone but an undated weeks-old draft SCO press release that details the plan and was read to us has been quietly making the rounds. At press time, we got word that a major player, believed to be IBM, thought it had dissuaded SCO from going through with the idea.

"A usually reliable source swears a SCO executive told him that SCO has hired the redoubtable David Boies, who prosecuted the Microsoft antitrust case for the Justice Department, to press infringement claims not against users but against the other Linux distributions."

If IBM, or whoever it was, was having discussions with them at that time, they are in a position presumably to testify as to the content of those discussions and as to the truthfulness of McBride's assertion that they were not contemplating legal action until "months" after January.

Simply by being an interested and aggressive defendant with deep pockets, IBM is now effectively shielding Linux users from damages, even without an indemnity provision in the GPL.

"Q: What is my risk if I continue to use Linux?

"A: Assume the very worst: Assume SCO wins its case against IBM and IBM writes a big check for damages. Assume SCO proves that some portion of Linux is a copy or derivative work of its trade secret software. Assume SCO gets an injunction to prevent anyone from using any version of Linux containing infringing code. As I previously assured you, long before that happens there will be a new open source version of Linux omitting any SCO code. Non-infringing Linux will be readily available for everyone's free use because the open source community is entirely committed to Linux. Whatever IBM may be forced to pay will presumably compensate SCO for its damages. It would be astonishing if, after IBM p aid SCO some huge damage award, a court would let SCO go after users as well for the same damages. For these reasons, the SCO vs. IBM lawsuit is not likely to have any real impact on Linux users. It is a battle of big companies that will be resolved in due course by the court, perhaps by the payment of money. In the meantime, and forever, Linux is available for free."

OSDL's press release says Lawrence Rosen is founding partner of Rosenlaw & Einschlag, a technology law firm, with offices in Los Altos Hills and Ukiah, California (http://www.rosenlaw.com ). He also servers as general counsel and secretary of Open Source Initiative (http://www.opensource.org ), which reviews and approves open source licenses and educates the public about open source issues. Another release here.

The SCO Group Comments on Insider Transactions

LINDON, Utah, Aug 14, 2003 -- The SCO Group, Inc. (Nasdaq: SCOX) encourages its directors and executive officers to sell the stock held by them through plans designed to qualify for the protections provided by Rule 10b5-1 under the Securities Exchange Act of 1934.

The 10b5-1 plans provide for future sales of stock, at predetermined times and in amounts and under conditions specified in the plans, without subsequent instructions from the participants. These plans have been adopted by the following individuals: Robert Bench, CFO; Jeff Hunsaker, Sr. VP Marketing; Reg Broughton, Sr. VP International Sales; and Michael Olson, VP Finance/Controller. These plans have been implemented primarily for the purpose of providing liquidity to the participants to meet sizable personal tax liabilities resulting from the vesting of restricted stock awards.

During the three months ended July 31, 2003, individuals selling under approved 10b5-1 plans sold 88,000 shares of the Company's common stock. Two other executive officers sold 29,616 shares during the same three-month period in Company approved open trading windows. For the upcoming three-month period to end on October 31, 2003, the above-referenced executive officers may sell up to 141,000 shares of the Company's common stock under current 10b5-1 plans if the conditions of the various plans are met. No other directors or executive officers have implemented a 10b5-1 trading plan to sell shares of the Company's stock during the next three months.

Our directors and executive officers beneficially hold approximately 6,005,000 shares and options to acquire an additional 2,016,000 shares.

Here's what the Wall Street Journal is saying today (a link would be useless unless you have a sub):

Now, SCO is preparing to wheel out the software-industry equivalent of a nuclear bomb: It will argue that the GPL itself is invalid, says SCO's lead attorney, Mark Heise of Boies Schiller & Flexner LLP. Mr. Heise says the GPL, by allowing unlimited copying and modification, conflicts with federal copyright law, which allows software buyers to make only a single backup copy. The GPL 'is pre-empted by copyright law,' he says. . . .

Wednesday, a spokesman said Microsoft thinks 'the industry would benefit' from a court ruling on the GPL. . . .

James Boyle, an intellectual-property professor at Duke University's law school, says, "I have a hard time seeing any court saying this license isn't enforceable," in part because it covers so much important software. "Courts pay attention to that pragmatically, and it's legally relevant because the consequences [of overturning it] would weigh heavily."